Insurance

The cost of insurance should be based on risk. The earliest forms of insurance were based on the risks encountered by shippers.  It was a cash-flow instrument that allowed ship and cargo owners to protect themselves from loss of ships and cargo to storms and pirates. This is why records were kept detailing the cargo that was shipped and the cargo that was delivered.  

Marine insurance was the earliest well-developed kind of insurance, with origins in the Greek and Roman marine loan. it was the oldest risk hedging instruments our ancestors used to mitigate risk in medieval times were sea/marine (Mutuum) loans, commenda contract, and bill of exchanges.

Separate marine insurance contracts were developed in Genoa and other Italian cities in the fourteenth century and spread to northern Europe.

Premiums varied with intuitive estimates of the variable risk from seasons and pirates.  Modern marine insurance law originated in the Lex mercatoria (law merchant).

In 1601, a specialized chamber of assurance separate from the other Courts was established in England. By the end of the seventeenth century, London's growing importance as a centre for trade was increasing demand for marine insurance.

In the late 1680s, Edward Lloyd opened a coffee house on Tower Street in London. It soon became a popular haunt for ship owners, merchants, and ships' captains, and thereby a reliable source of the latest shipping news.

Lloyd's Coffee House was the first marine insurance market. It became the meeting place for parties in the shipping industry wishing to insure cargoes and ships, and those willing to underwrite such ventures. These informal beginnings led to the establishment of the insurance market Lloyd's of London and several related shipping and insurance businesses. The participating members of the insurance arrangement eventually formed a committee and moved to the Royal Exchange on Cornhill as the Society of Lloyd's.

The establishment of insurance companies, a developing infrastructure of specialists (such as shipbrokers, admiralty lawyers, bankers, surveyors, loss adjusters, general average adjusters, et al.), and the growth of the British Empire gave English law a prominence in this area which it largely maintains and forms the basis of almost all modern practice. 

Lord Mansfield, Lord Chief Justice in the mid-eighteenth century, began the merging of law merchant and common law principles. The growth of the London insurance market led to the standardization of policies and judicial precedent further developed marine insurance law.

In 1906 the Marine Insurance Act codified the previous common law; it is both an extremely though and concise piece of work. Although the title of the Act refers to marine insurance, the general principles have been applied to all non-life insurance.

In the 19th century, Lloyd's and the Institute of London Underwriters (a grouping of London company insurers) developed between them standardized clauses for the use of marine insurance, and these have been maintained since. These are known as the Institute Clauses because the Institute covered the cost of their publication. Out of marine insurance, grew non-marine insurance and reinsurance.

Marine insurance traditionally formed the majority of business underwritten at Lloyd's. Nowadays, Marine insurance is often grouped with Aviation and Transit (cargo) risks, and in this form is known by the acronym 'MAT'.

https://www.jstor.org/stable/pdf/251881.pdf?seq=1/subjects

Norb Leahy, Dunwoody GA Tea Party Leader